2018 (8) TMI 461 - AT - Central Excise

CENVAT Credit - inputs - clinker cleared as such for export to Bangladesh - case of the Revenue is that as per the provisions of Rule 3 (5) of CENVAT Credit Rules, 2004, the inputs on which credit has been taken can be removed as such, on payment of the credit availed, equivalent to CENVAT Credit - Held that - The inputs on which the credit has been availed, were exports under due intimation to the Department - the Tribunal in various decisions have held that there is no bar in removal of inputs as such, underbond and there is no requirement to reverse the CENVAT Credit availed. The removal of Clinker without payment of duty for export to Bangladesh is in accordance with law - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of CENVAT Credit on inputs cleared for export to Bangladesh.

Analysis:
The dispute revolves around the demand of CENVAT Credit on the inputs (clinker) cleared for export to Bangladesh. A Show Cause Notice alleged that the assessee removed a specific quantity for export without paying Central Excise Duty. The Adjudicating Authority confirmed the demand along with interest and imposed a penalty. The appellant, engaged in cement manufacturing, argued that the duty paid on the clinker used for cement production is availed as credit. The dispute pertains to the denial of credit on clinker cleared for export. The appellant cited Rule 19 of Central Excise Rules, 2002, allowing removal of excisable goods without duty payment from the manufacturer's factory. The appellant also referenced relevant Board Circulars to support their case.

The Commissioner held that the appellants must reverse the credit availed on the clinker cleared for export as per Rule 3(5) of the CENVAT Credit Rules, 2002. The Revenue contended that the inputs can be removed for export on payment equivalent to the availed credit. However, the records indicated that the inputs were exported with intimation to the Department. The Tribunal referred to a Board Circular clarifying that manufacturers can export goods under bond without duty payment. Previous tribunal decisions supported the notion that there is no requirement to reverse CENVAT Credit on inputs cleared for export.

In light of Rule 19, the Board's clarifications, and previous tribunal decisions, the Tribunal concluded that the removal of clinker without duty payment for export aligns with the law. Consequently, the order confirming the duty demand, interest, and penalty was set aside, and the appeal by the appellant was allowed. The cross objection was disposed of accordingly.